Autumn Budget 2025: Five rumoured changes and what they could mean for your finances

With the Autumn Budget less than a week away, speculation is rife as to what measures the Chancellor of the Exchequer, Rachel Reeves, might announce as she attempts to bridge a multi-billion pound gap in Government finances.

We take a look at five rumours that have been doing the rounds and what they could mean for your finances:

Extension to income tax band freeze

While it was reported last week that plans to raise income tax rates had been scrapped, consumers could still face a bigger tax burden if the Chancellor decides to extend the freeze on income tax bands beyond April 2028.

These bands are used to determine how much tax a person owes based on their annual income and are supposed to rise in line with inflation. However, they haven’t been changed since April 2021.

^{Note: Income Tax bands and rates differ if you live in Scotland, and is paid to the Scottish Government. For more information, visit the Government website.}

Under current plans, over four million more people are already expected to be brought into paying income tax by 2029/30 as wages grow but thresholds stay the same – a process known as ‘fiscal drag’. A two-year extension (which would prolong the freeze until April 2030) could add an extra 960,000 taxpayers to this estimate and generate an additional £8.3 billion in revenue, according to the Institute for Fiscal Studies (IFS).

Not only will those being pushed up the ladder have to pay more income tax, but they’ll also see their Personal Savings Allowance (PSA) slashed. This is the total amount of interest that can be earned from savings each year before needing to pay tax.

“It has been a testing time for savers,” said Rachel Springall, Finance Expert at Moneyfactscompare.co.uk. Despite recent interest rate cuts, she explained that higher rate taxpayers earning just 3% on a £20,000 deposit will breach their £500 allowance and be taxed on their returns.

“Cash ISAs will keep enticing hordes of savers who wish to utilise their tax-free wrapper, but even these are under threat,” she added.

Cut to Cash ISA allowance

Next week’s Autumn Budget might be the opportunity the Chancellor has been waiting for to reduce the cash ISA allowance.

It was initially suggested several months ago that Reeves wanted to lower the amount savers could deposit in cash ISAs from £20,000 to £4,000 per year as a way to get more people investing. When rumours resurfaced in October, this was amended to a slightly more palatable £10,000.

Now, the Chancellor is reportedly considering reducing the cash ISA allowance to £12,000 after continuing to face backlash.

“The Government has a goal to stimulate growth, but they must not penalise savers who have no desire to invest,” said Springall. Furthermore, she added that lowering the cash ISA limit could raise borrowing costs and “cause chaos in the housing market”.

Property tax reform

The housing market could be further impacted by changes to property tax; reports suggest the Chancellor is exploring ways to replace Stamp Duty and council tax with new forms of taxation.

On the one hand, this could benefit first-time buyers who currently pay Stamp Duty when purchasing a home worth over £300,000. However, proposals to impose tax on the sale of properties valued above £500,000 could cause homeowners to feel reluctant to move  and disrupt the supply chain.

“The other suggestions are to introduce a ‘mansion tax’, a yearly tax levy on high valued properties,” said Springall. The “controversy around such property tax changes could steer sellers to feel rushed” she explained but added “they should always seek advice before making any rash decisions”.

Lifetime cap on gifts

However, Springall warned that a rumoured lifetime cap on tax-efficient gifting could undermine efforts to improve conditions for first-time buyers. Under current rules, Inheritance Tax (IHT) doesn’t apply to any cash or assets gifted seven or more years before the giver dies.

“Limiting the gifting allowance would be a huge blow for borrowers who will need to turn to the ‘Bank of Mum and Dad’ to build a big enough deposit to secure a mortgage in the coming months,” said Springall. For help navigating the mortgage market, she encouraged would-be borrowers to get advice from a mortgage broker. Those wanting guidance on tax-efficient gifting could also speak to a financial adviser.

National Insurance applied to rental income

There’s also talk of changes in the buy-to-let market, with suggestions that the Chancellor wants to bring rental income under the scope of National Insurance.

At present, only landlords who meet certain criteria are expected to make National Insurance Contributions (NICs), such as those who rent out multiple properties, are looking to purchase additional rental properties or whose main occupation is being a landlord.

“Unlike other reforms that gradually hit landlords, this could become a significant move to lead more landlords into setting up a limited company for their buy-to-let portfolio,” said Springall.

“This has been a growing trend over recent years due to reductions in mortgage interest tax relief, which was gradually phased out between 2017 and April 2020,” she added.